What are the benefits to NOT filing for bankruptcy if I have zero assets anyway?
I'll start this off by saying I have held credit cards for 18 years now and NEVER even missed a payment. I have had ZERO delinquent accounts or closures my whole life. Everything I did with my credit has been perfect EXCEPT that I am now at 100% utilization so my score has plummeted to about 638 I believe.
I have been self employed for the last 15 years or so. The pandemic basically crushed my industry. So that's when I went to University...
A few years ago I was pre-approved for a $10,000 loan (I think it was during the pandemic and I needed it because I was in school - so I took it). I was also then pre-approved for a $10,000 line of credit. I also took student loans to go to school. At no point did anyone at the national bank I'm with tell me there were student lines of credit. So while in school with no income other than student loans, I got severely into credit card debt.
I now owe:
$10,000 on a personal line of credit at around 10.45 variable%. Payments are about $200 a month right now.
$4200 or so remaining on a personal loan that has an auto payment that comes out at about $210 a month.
$59,000 on a 13% CAD credit card (payments around $700 a month usually)
$5,000 on a 22% USD credit card (So let's say about $7,000 CAD once converted. Payments around $140 CAD a month once I convert)
I owe a friend about $1200 (he is not charging me interest but I feel like I should pay it back with something extra added on because it's been about 2 years)
I owe another friend $500 (no interest)
About $55,000 in student loans that payments will kick in next June - no idea how much they will be.
So even before the student loan payments kick in, I am right now paying about $1500 a month in debt payments.
My rent and utilities come about to about $1600 a month.
Cell phone $60.00 a month.
Gas probably $300 a month.
And then groceries maybe $400 a month.
So necessities alone are about $2900 a month.
My income is $3600 a month. - Anything extra is usually going to buying extra food, or buying car insurance, or CAA, or tenant insurance, or just extra living expenses like driving to the city for a doctors appointment, parking, attending a friends wedding, car repairs, etc.
I'm just surviving now and the student loan payments haven't even kicked in yet.
I have ZERO assets - my car is over 20 years old - bought it cash - probably valued a $1000 at this point.
I have no home, no savings, nothing. I have no kids. I have no expensive antiques or personal items of value.
When I was still in school a LIT said I could do a bankruptcy for $200 a month for 8 months ($1800) and be free of everything except the student loan debt.
That's about $80,000 of debt removed by paying $1800 or 9 months.
That seems like a pretty good deal. That was when I didn't have a job or income yet though. I don't know if my making $3600 a month now would change that any. But it's not like I'm getting ahead at all on $3600 a month.
Everytime I mention possibly filing for bankruptcy though, people tell me not to do it. I don't have a family support system and I live alone. Am I putting myself in danger by filing a bankruptcy possibly by not having extra options for lending support maybe for 7 years? I have never had a credit check to get an apartment, and I've been renting for almost 30 years now.
I've been trying to get a better job, but even if I was making $5,000 or $6,000 a month, the length of time it would take to pay down $80,000 seems very daunting. Plus the $55,000 in student loans coming up.
I don't even know where to go to get advice on this. My credit score is low based PURELY on my 100% utilization. I spoke with a financial advisor who did't even believe me - but told me to check my credit repot and I did - all of my markers are PERFECT because I've never missed a payment in 18 years. I only got my job 3 or 4 weeks ago. Will my credit score go up once i registers I have a job maybe? I was self employed for 15 years so i didn't even have pay stubs or anything and managed to get all that credit because I was so good with my money. The pandemic crushing my industry and causing me to change careers, and then school debt - really changed everything for me though.
The financial advisor from the bank thought it was unlikely I'd get approved for a further loan to do some kind of consolidation loan. I've tried speaking to 3 of them now with this Canadian bank and they always basically tell me there's nothing they can do to help which seems insane. I ask them why wouldn't they rather have some of the $80,000 back rather than just $1800 if I file for bankruptcy and they agree, but yet then offer me ZERO options. I get the impression the "financial advisors" really don't actually know much, and are just processing applications and waiting for a computer to either reject or approve them. How do you talk to a REAL PERSON about trying to fix something like this even?
But what are the benefits of trying to find a way to get it paid off if a bankruptcy can relieve me outright and be over and done with in 9 months? And then 7 years where I can't borrow... ok... but at least I'll be keeping an extra $1500 a month... and maybe more if i can move into a better job eventually.
Can anyone give me some perspective on this? The bankruptcy seems like the better deal, but am I missing what the benefit would be of doing it a different way?